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This is arguably the most awaited new report about the economy as it relates to the foreign exchange (forex) market. The report is an indicator of the US economy; it includes, displays and describes jobs added or reduced in the economy (apart from government workers, non-profit organization employees, farmers, and private household employees). In essence it measures the net changes in employee jobs. This makes NFPs one of the most anticipated news for people that are into forex and other related areas. The report is always published every first Friday of the month at 8:30AM ET in the US, by the US Bureau of Statistics and is an indicator of the current situation of the economy.
The release of this report makes forex market very volatile and one would always notice sharp spiked in currency pairs (especially those that includes the US dollar). Experienced traders understand what drives NFPs and also how to trade with them because they understand their effect on the forex market.
Currency pairs that include that of the USD (e.g., GBP/USD, EUR/USD, AUD/USD, etc.) always take the most volatility when the report is being released. In extension, since the US is the world’s largest economy, and the USD is reserve currency of the world, a careful examination of currency pairs that do not include the USD is also affected by the NFP report bringing about increased volatility and this could stop some trades.
We do not trade into the period when these reports are released as there is an increased volatility and wider spreads. At MLC, we close all our pending trades before reports are released and adopt the pullback strategy instead of the break out strategy. This mandates that we wait for the currency pair in question to ‘pullback’ (retrace) before we get into the trade. We wait for the first pullback to occur after that first breakout when the report is published (usually happens minutes after the report). The EUR/USD pair is arguably the most traded currency pair in the world, and this is good because it provides the smallest spread for making trades. So its usually safer to day-trade this currency pair during the report release. We just observe the moves and wait for it to align with our trade set-up before we jump in. These trades are
We wait for the pullback in the opposite direction of the initial move after the report is released. That means that if the initial move after the report release was a huge upward more, we will wait for a retracement that does not necessary go back to the position it was before the report release. This strategy will have reversed if the initial move after the report release was a huge downward move
Other data release that affects the market include:
We take advantage of the economic calendar to have an idea of the date of specific data releases. So we can see that trading the forex market is beyond using technical indicators to make trading decisions, the fundamentals of a currency or currency pair has to be understood and MLC capitalizes on this with her competent team that consistent digs out information, news and data reports that moves the market.
MLC has the sole purpose of making our clients not just financially free, but also psychologically relaxed in the midst of obvious global economic turmoil.
Risk Reminder: Trading foreign exchange and/or contracts for differences on margin carries a high level of risk and may not be suitable for all investors. The possibility exists that you could sustain a loss in excess of your deposited funds. Before deciding to trade the products offered by Maxloz Capital. You should carefully consider your objectives, financial situation, needs and level of experience. You should be aware of all the risks associated with trading on margin. Maxloz Capital provides general advice that does not consider your objectives, financial situation or needs. The content of this Website must not be construed as personal advice. Maxloz Capital recommends you seek advice from a separate financial advisor.